Opinion Column

The Health Reform (Almost) Everyone Loves

Come with me to the land of happy health reform. It is a place where Republicans and Democrats find common ground, a place where physicians, hospitals and health insurers sit together as partners, a place where criticism is respectful, not rancorous. It is the world of Accountable Care Organizations (ACOs).

What are ACOs, and why have they escaped the general onslaught of opprobrium from Obamacare opponents?

The term Accountable Care Organization was originated by Elliott Fisher of the Dartmouth Center for the Evaluative Clinical Sciences, picked up by the Medicare Payment Advisory Commission and then enshrined in Section 3022 of the Patient Protection and Affordable Care Act (otherwise known as health care reform). The language is explicitly designed to use financial incentives to change the health care delivery system.

ACOs are defined less by form than by function. A group of physicians, possibly with a hospital, agrees to manage the full spectrum of care for a defined population of at least 5,000 Medicare beneficiaries for a minimum of three years. If the ACO meets certain targets for quality and cost-effectiveness, it gets to keep part of the savings.

In theory, everyone wins under this arrangement; that is, efficient and effective providers are rewarded, the government saves money and patients are healthier.  Whether the ACO theory will work in practice is an important question, but not as intriguing at the moment as the political one: why aren’t politicians and special interests screaming invectives at each other? I think there are three characteristics that explain the ACO love fest and speak to whether it might be replicated in other areas.

Perhaps the most important ACO characteristic is that its theoretical underpinnings have broad and deep bipartisan support. The idea of using financial incentives to organize care delivery more efficiently is not new. During the 1980s, however, proponents began to believe we could actually measure high-quality, cost-effective care and reward those who practiced it.

Over the years, a steady stream of books, journal articles and white papers has turned what was controversial into conventional wisdom. For example, in April, a bipartisan group of House members announced the formation of the Quality Care Coalition, “to provide Members of Congress a forum to transform the health care system to reward value in care and make evidence-based, quality care the standard.”  It also helps that ACOs address how we organize care for the already insured, rather than the redistributive hot button of coverage for the uninsured.

The second advantage of ACOs, nearly as important, is that the concept promises to put money in the pockets of a broad range of stakeholders. Doctor groups and hospitals around the country are scrambling to form ACOs in an effort to extricate themselves from the Medicare fee-for-service squeeze. For example, 19 health systems affiliated with the Premier healthcare launched two collaboratives designed to create ACOs responsible for the health of more than 1.2 million patients.

The complex challenges inherent in setting up and running a successful ACO also means most aspirants will be seeking some sort of help. They’ll need state-of-the-art information systems, ongoing legal advice and maybe even some help from an experienced insurer in taking on risk. Given all the unknowns, consultants and vendors of every stripe are sure to flourish.

Which brings up the third reason why ACOs are popular: ACOs are “government light,” at least for now. There are no mandates; providers can choose whether or not to form an ACO. There’s also plenty of room for innovation in accomplishing the ACO’s legislative mission. “Virtual ACOs” involving independent physicians in private practice are just as acceptable as the large, integrated systems repeatedly rolled out as role models.

Moreover, while HHS must launch the ACO program by Jan. 1, 2012, detailed regulations are not required until year-end. In their absence, no stakeholder can squawk that the government has gotten it wrong. And, of course, until the program begins, there are no complaining losers, only potential winners.

Unfortunately, the replicability of the ACO reprieve from partisan bickering may be limited. There are other delivery system reforms, and even some insurance reforms, that have bipartisan support similar to that enjoyed by ACOs, but there are few that can promise to put money in providers’ pockets while soothingly assuring them that those who want to ignore the new ways of practice and continue to practice as usual will be able to do so. Indeed, some skeptics question whether the blessing of providers for ACOS was obtained at the cost of weakening their ability to make a cost and quality difference; the details of final regulations and cost-quality standards will be the test that argument.

In its 2001 report, Crossing the Quality Chasm, the Institute of Medicine famously called for a fundamental change in the way delivery of care is organized. “Trying harder will not work,” said the IOM. “Changing systems of care will.”

ACOs, bringing together providers to take responsibility for meeting specific quality and cost goals related to care across the spectrum, unquestionably symbolize the kind of change the IOM was asking. Whether the enthusiasm for the concept in theory will be justified by the ACOs in practice is the larger question remaining to be answered.